Officials are looking to purchase up to 13 acres east of the Apple Valley Transit Station that they believe can be marketed to a large employer and used for additional retail, office and housing development.

Apple Valley has high hopes for empty land

Construction continues on a new transit station at 147th Street and Cedar Avenues, in Apple Valley. The station is one of the stops on a Bus Rapid Transit line, the Red Line, which is slated to open June 22 and offer all-day, frequent bus service between Apple Valley and Bloomington. (Staff photo: Bill Klotz)

Apple Valley officials are looking to purchase up to 13 acres of vacant, tax-forfeited land east of the Apple Valley Transit Station that they believe can be marketed to a large employer and used for additional retail, office and housing development.

The five parcels that have been identified for purchase straddle 153rd Street West, between Garrett and Galaxie avenues, and are a half-mile west of the transit station, at 15450 S. Cedar Ave. Beginning next month, the station will serve as a stop on the state’s first Bus Rapid Transit line, the Red Line, which will offer all-day bus service between Apple Valley and the Mall of America in Bloomington.

The land Apple Valley is eyeing was slated for mixed-use development more than five years ago but plans fell apart amid the housing crash. The city’s vision for what it calls “Central Village” is for high-density, transit-oriented development.

To help the city pursue that vision, the Metropolitan Council is looking to reallocate an $866,000 grant originally given to the city to repurpose two office buildings at 15025 Glazier Ave. The city sought to remake the site in its effort to land a Stream Global Services call center. Last fall, Stream Global Services moved to Eagan instead.

Bruce Nordquist, community development director for Apple Valley, said the city hasn’t identified an end user for a new 3.7-acre site it believes can be used to draw a major employer.

But Nordquist said the city is talking with three developers who have expressed interest in the site and that it could be used for up to 100,000 square feet of office space. Nordquist would not identify the developers the city is talking with on Monday.

Once the site is acquired, the city would likely issue a request for proposals and sell the site to the developer it believes is most promising. Nordquist said the city wants to get involved so that it can have more control over how the land is developed and to provide incentives to a developer.

In addition to the land purchase, the city is looking to create a tax increment financing district that would allow it to capture increased property values in the Central Village area to build a 400-space, $2.3 million parking ramp at 7075 W. 152nd St., east of the employment center property. The ramp would be open to the public.

“While we’re starting to see some momentum in Minneapolis and the near-ring suburbs, it’s a bigger challenge to attract job development locations to Apple Valley,” Nordquist said. “One of the game changers we have is having the right tools.”

Valuations of the five parcels eyed by the city break down this way:

The two parcels that make up the employment center site are valued at $1.13 million, but Nordquist said a purchase price is still being negotiated.

The parking ramp site is valued at $521,400 while the other two sites the city has identified for purchase, which sit south of West 153rd Street, are together valued at $2.1 million. Nordquist said their development is seen as more long-term.

Despite the city’s ambitions, commercial real estate brokers familiar with Apple Valley say it could be challenging for the city to land a large employer.

The Apple Valley Business Campus, at 14607 and 14608 Felton Court, Apple Valley, has drawn ten tenants since opening earlier this year, including a dog boarding facility. The two 50,000-square-foot buildings included in the development are now 60 percent leased, according to developer Mark Hebert. (Staff photo: Bill Klotz)

Mark Stevens, an associate vice president at Cassidy Turley who leases space at the Grand Oak Business Park in Eagan, said large office users would likely look at existing space nearer to the core of the Twin Cities before considering new development in Apple Valley.

The Grand Oak Business Park, among the larger spaces available in the southeast metro with 540,000 square feet, is 71 percent occupied, he said.

“It’s not a bad thought, it’s just a matter of how long will it take to find the right user,” Stevens said.

Becky Leebens, a managing director at KW Commercial Midwest who leases space at the Glazier Avenue buildings the city sought to refurbish last year, shared the sentiment. She said most of the tenants in those buildings need small space and grew out of the local market.

“Expansion always happens from the core of the Twin Cities out and unless you have a company that’s seeded out here and outgrown their space it will be hard to attract those large users,” Leebens said.

One developer who has found success, though, is Mark Hebert, owner of Hebert Commercial Properties, who opened a pair of $3.5 million, 50,000-square-foot office-warehouses in Apple Valley earlier this year.

The Apple Valley Business Campus, located at 14607 and 14608 Felton Court, are now 60 percent leased. Among the 10 tenants are an internet marketing firm, a cabinet maker, a dog boarding facility and a landscaping business.

Hebert said Tuesday that he expects the remaining space to be fully leased by the end of the year.

The buildings are a mile west of the BRT line. Hebert said connections to a new 147th Street transit station are a possibility. Other attractive features include flexible lease terms and lower base rents, he said.

The Met Council grant is scheduled to expire in April 2015, though the city can request a two-year extension if no development has occurred.